BREAKING NEWS: NASA is making an unprecedented investment in commercial space transportation services with the hope of creating a competitive market for supply flights to the International Space Station (ISS).

Two industry partners will receive a combined total of approximately $500 million to help fund the development of reliable, cost-effective access to low-Earth orbit. The agency is using its Space Act authority to facilitate the demonstration of these new capabilities. NASA signed Space Agreements Aug. 18 with Space Exploration Technologies (SpaceX) of El Segundo, Calif., and Rocketplane-Kistler (RpK) of Oklahoma City to develop and demonstrate the vehicles, systems, and operations needed to support a human facility such as ISS. Once the space shuttle is retired, NASA hopes to become just one of many customers for a new, out-of-this-world parcel service.

The venture marks a break with tradition for the 48-year-old space agency. “This is the first opportunity NASA has taken to engage entrepreneurs in a way that allows us to satisfy our needs and lets commercial industry gain a foothold. It could, and should, have profound impacts on the way NASA does business,” said Marc Timm, acting Commercial Orbital Transportation Services (COTS) Program executive in NASA’s Exploration Systems Mission Directorate.

Alan Lindenmoyer, manager of the Commercial Crew and Cargo Program Office at NASA’s Johnson Space Center, said NASA’s offer of seed money fulfills President Bush’s Jan. 14, 2004 directive to promote commercial participation in space exploration. The 2005 NASA Authorization Act also calls on the agency to advance space commerce. “We are directly tied to the Vision for Space Exploration and the law of the land,” Lindenmoyer said. “COTS marks a significant NASA activity to implement the commercialization portion of U.S. space policy.”

The demonstrations are scheduled to begin as early as 2008 and continue through 2010 or later. COTS will be carried out in two phases. Phase 1, unveiled Aug. 18, will include safe disposal or return of spacecraft that successfully dock at ISS and deliver cargo. A follow-on option to demonstrate crew transportation also is planned. Once demonstrated, NASA plans to purchase transportation services competitively in Phase 2.

Partners will be paid only if they succeed. Payments will be incremental and based upon the partners’ progress against a schedule of performance milestones contained in each Space Act agreement. The agreements were tailored to the individual partners and negotiated before partnership selections were made. NASA will gauge progress through site visits and milestone achievements.

Usually, the space agency issues detailed requirements and specifications for its flight hardware and it takes ownership of any vehicles and associated infrastructure that a contractor produces. For COTS, NASA specified only high level goals and objectives instead of detailed requirements where possible, and left its industry partners responsible for decisions about design, development, certification and operation of the transportation system. Because NASA has a limited amount of money to invest, it encouraged the partners to obtain private financing for their projects and it left them free to market the new space transportation services to others.

This model for pursuing of commercial space services is another first for NASA and a reflection on the growing maturing of commercial space capabilities. “This is not a traditional NASA procurement or program. We could change the economics of space flight with this,” said Lindenmoyer, whose office oversees COTS. NASA expects use of this model to increase over time as the exploration program unfolds, potentially extending to the provision of power, communications, and habitation facilities by commercial entities.

Limited resources and the space shuttle’s pending retirement created the need for the new service, and the emergence of enabling technology has created a favorable environment for COTS development, according to Timm. Industry interest was keen, with nearly 100 companies submitting expressions of interest and 20 companies submitting initial proposals.

NASA expects that purchasing commercial space transportation services will be more economical than developing government systems of comparable capability. This could free up additional resources for lunar missions and other activities beyond low-Earth orbit.

The biggest benefit of the anticipated cost savings is the opening of new markets for an emerging industry, according to Lindenmoyer. “If we had cost-effective access, many new markets — biotechnology, microgravity research, industrial parks in space, manufacturing, tourism — could start to open. That’s what is so important about this effort.”